Hello, and welcome to Safehaven’s Blog on the first day of trading in 2019! It’s interesting to see how the market moved today, despite a heavy boost for the US$ after the Democratic side of the US congress elects Congressman Nancy Pelosi as their Speaker of the House. The US Dollar reached a high against a basket of its main counterparts. Although a one sided move, the euro had been trading at a record closing low on Friday, so a short squeeze in USD (including Brexit News) cannot be ruled out.
Earlier today, European shares had jumped after the German government voted to accept the new coalition deal that will continue the country’s stability and was forced to vote against what could have been an Angela Merkel exit from office. All eyes are now on Greece and the meeting of creditors next week with speculation reaching its peak before the meeting which caused a sharp drop in the euro. Looking ahead, investors will be looking for further evidence of a slowdown in China’s growth and capital outflows from the country, which both lead to lower oil prices. Ahead of the weekend, China is closing a 7 day long holiday weekend so it won’t be long until we see global markets, including copper, oil and stock indexes resume trading.
On the economic front, a major catalyst may well come this week as the US release their retail sales data on Wednesday. We have had a string of different GDP prints, so a couple more break above their recent highs could mean a real tipping point for the future direction of the market.